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No Cost EMI: Meaning, Advantages & More

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February 23, 2023


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What is No Cost EMI on Credit Cards?

For those who are planning to make big-ticket purchases, no-cost EMI can be a lifesaver. It not only makes shopping more affordable but also far more convenient.

Having said that, what does a no-cost EMI really mean? In simple terms, a no-cost EMI scheme allows you to divide the cost of your purchase into easy monthly instalments without having to worry about hefty payments upfront. There is no additional interest levied on the principal amount.

Let’s Understand What is No Cost EMI with an Example

  • If you opt for a conventional EMI for a year, you will have to pay a down payment and interest on the remaining amount.
  • With a no-cost EMI, you do not have to pay the interest amount; your EMIs will cover only the principal sum.
  • Many credit lenders offer this as a complementary service, while some have an additional annual fee.
  • The upper and lower amount, which can be converted into a no-cost EMI, varies depending on the lender.

What are the Advantages and Disadvantages of a No-cost EMI?



No Interest Payment - No-cost EMI eliminates the burden of paying interest on purchases. This is especially beneficial for high principal sum purchases with 9 to 12 months or more long tenure.

Hidden Fees - No-cost EMI schemes can have hidden charges, such as processing fees, administrative charges, or other costs that can negate the advantage of not paying interest.

No Hidden Charges - In most cases, there are no hidden charges to pay when availing of the No-cost EMI service. This makes it the go-to option for all major purchases.

Price Markup - Retailers may raise the product's base price to compensate for interest on a regular EMI, leading to a higher overall cost.

Better Financial Flexibility - Zero interest rates allow for better financial management by spreading payments over time and dividing expenses without extra costs.

Impact on Credit Score - EMIs, even if interest-free, can affect your creditworthiness when applying for other loans or credit cards, as lenders consider your existing obligations when assessing your ability to take on more debt.

Access to Better Lifestyle Choices - No-cost EMI offers access to a better lifestyle by allowing the purchase of goods and services that would otherwise be out of your budget.

Prepayment Penalties - Some No-cost EMI schemes might have prepayment penalties or charges if you decide to repay the EMI amount before the tenure ends, which could nullify the benefits of choosing this option.


Complex Terms and Conditions - No-cost EMI offers can have complex terms and conditions. Failing to meet these conditions might result in the interest being charged retroactively, leading to unexpected costs.


Learn how a no-cost EMI works and its advantages. Zero-cost EMI is a game-changer that has empowered individuals from various economic backgrounds to meet their aspirations and add convenience and comfort to their lives. Be careful when taking a no-cost EMI, as hidden charges and high processing fees or late payment penalties may needlessly deplete your savings or resort to borrowing funds.

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Frequently Asked Questions

1. What is the tenure of a no-cost EMI?

The tenure of a no-cost EMI can vary, typically ranging from three months to two years. This largely depends on the retailer and financial institution that is providing this service.

2. What are the consequences of missing an EMI payment?

Missing an EMI payment, even under a no-cost EMI plan, can result in late payment fees. This can also affect your credit score.

3. Are no-cost EMI options a good financial choice?

No-cost EMI options can be beneficial if you require the product and prefer to manage your expenses over time.

4. Can I avail of discounts or cashback offers along with a no-cost EMI?

Yes, some retailers might offer additional discounts or cashback offers in conjunction with a no-cost EMI option, making your purchase even more attractive. However, in some cases, you can’t club the no-cost EMI option with discounts.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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